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Eye on Annapolis

The Daily Record's Maryland state government blog

Transportation Secretary Rahn to amend financial disclosures

Maryland Transportation Secretary Pete Rahn. (File)

Maryland Transportation Secretary Pete Rahn. (File)

State Transportation Secretary Pete K. Rahn will amend his state financial disclosure filings after a review by The Daily Record found he failed to disclose the ownership and later sale of stock in a company that formerly employed him.

Rahn owned 28 shares of stock in HNTB,  a Kansas City, Missouri-based architecture and engineering consulting firm. Rahn was a senior vice president for the firm before being tapped by Gov. Larry Hogan in 2015 to serve as head of the Maryland Department of Transportation.

In an interview Monday, Rahn disclosed publicly for the first time that he owned an undisclosed number of shares in the company. He said he initiated a sale in January of 2015 and completed that sale roughly four months later.

A review of public financial disclosures for calendar years 2014-2017 showed that Rahn failed to disclose, as required, both the ownership of the stocks and his sale — a potential violation of state ethics law.

The stock ownership and sale has drawn attention following disclosures, first reported in The Daily Record last week, that Rahn had waived the state’s normal procurement process to choose a consortium headed by HNTB to provide management oversight on the $7.6 billion project to widen Interstates 270 and 495. Rahn had dined privately with an HNTB executive weeks earlier and had sought an ethics opinion from the state approving his role in the process — but only after transportation officials had chosen the HNTB group as the winner from among four bidders.

Erin Henson, a spokeswoman for Rahn, said Monday that the failure to disclose the holdings and the sale of the shares amounted to a misunderstanding about what was required.

“When the Secretary filled out the report in January 2015, he thought that was for the current status when he no longer owned stock in HNTB,” Henson said in an email.

Rahn, as with other public officials, is required to take ethics training within six months of being hired. Henson said Rahn took the training. Confirmation of the training was not immediately available from the Maryland State Ethics Commission.

Henson said Rahn will now amend his forms, which included erroneous filings that made it appear as if he were working for the state and HNTB at the same time.

“Now that the Secretary is clear that the January 2015 form was for 2014 information, he will correct the 2014 and 2015 Schedule B to reflect the conversion of stock to cash.  He also will delete the HNTB employment inadvertently left on the 2016 (disclosure),” said Henson.

Rahn owned 28 shares of stock in the company, which he reportedly paid $150 per share. Henson said he sold the shares for $74.68 each, a nearly 50 percent loss.

HNTB was the leader of the winning bidder. The group was set to be formally awarded a contract that paid nearly $69 million over two years, with seven additional years at an undetermined cost, at Wednesday’s Board of Public Works meeting. Hogan on Tuesday withdrew the request for the board to approve the contract when it became clear that it probably would not get the two votes needed to pass, but he is expected to bring it back later this year.

A Hogan spokeswoman acknowledged that both Comptroller Peter Franchot and Treasurer Nancy Kopp, who along with Hogan make up the Board of Public Works, had raised questions about the contract and that those questions would be answered by the department before the contract is brought to the board.

Hogan’s proposals for Interstate 495 and Interstate 270 would encompass approximately 75 miles of highway and potentially affect 500,000 people daily, according to the Department of Transportation.

The governor announced the expansions in September as part of a larger $9 billion highway congestion relief proposal.

State officials have said they want to accelerate the project, and Rahn on March 6 waived the more formal procurement process for choosing a company or group to oversee the project. Officials said the alternative process would get the project started as much as two years faster.

The secretary also sat in on presentations in mid-March — an action he acknowledged was unusual.

Only after the winning bidder was named by the department did Rahn seek advise from the state ethics commission about the propriety of his actions. The commission cleared the secretary on the basis that he had no current financial ties to his former employer but warned of appearances of a conflict and “whether the integrity of the agency will be affected in a negative way.”

A government ethics watchdog group called the actions the definition of an appearance of a conflict of interest. Several Democratic gubernatorial candidates also have been critical of the contract.

Hogan, through a spokeswoman, expressed “confidence in Secretary Rahn” and his actions.

Rahn has defended the process, saying the winning bidder was clearly the best choice for the project and for taxpayers.


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